A borrowed Rs.58,000 from B at 8% per annum simple interest for 2 years. He lent the same sum to C at 10% per annum compound interest, compounded annually for 2 years. How much did he earn (in Rs.) in the transaction at the end of 2 years?
Show answer & explanation
Correct answer: C
Explanation
The correct answer is Option 3 i.e. 2,900.
A pays Simple Interest to B:
SI = (58000 × 8 × 2)/100 = ₹9280
A receives Compound Interest from C:
CI = 58000 × [(1.1)2 − 1] = 58000 × (1.21 − 1) = 58000 × 0.21 = ₹12180
Profit = 12180 − 9280 = ₹2900